Global stocks drop as oil prices fall back

 20 Apr 2016 - 13:56

Global stocks drop as oil prices fall back

 

 

 


London: European and Asian stock markets mostly retreated on Wednesday, with oil prices dropping once more as crude workers ended a strike in key producer Kuwait.

Crude markets, which have been centre stage this week after the collapse of weekend talks to tackle a global supply glut, tumbled by around 2.0 percent Wednesday on the news coming out of the OPEC member country.

"Asian markets got an early lift from a weak dollar and rising oil price but gave up early gains after Kuwaiti oil workers ended their three-day strike, bringing oil prices back down as markets adjust to the higher supply," said Jasper Lawler, analyst at traders CMC Markets.

"It had been the reduced supply from Kuwait that played a role in supporting oil prices in the wake of the failed Doha meeting."

After falls for equities in Asia, Europe took up the baton and at around 1015 GMT, London's benchmark FTSE 100 index was down 0.5 percent. 

In the eurozone, Frankfurt's DAX 30 lost 0.2 percent and the Paris CAC 40 slipped also by 0.2 percent in value compared with Tuesday's close.

"A sharp drop in Chinese equities, alongside a renewed slide in oil prices, has seen European equity markets trade lower," said Rebecca O'Keeffe, head of investment at stockbroker Interactive Investor

"On its own, the worst day for China in seven weeks shouldn't cause undue concern, however a slump in Chinese shares was one of the major catalysts for the sharp downward leg in global equity markets early this year, so investors will be keeping a close eye on events in Asia," she added in a note to clients. 

Shanghai's market was the biggest loser on Wednesday, shifting 2.3 percent.

Analysts said there was speculation dealers were concerned that a string of positive recent data from China, the world's number two economy, could prevent authorities there from unveiling more stimulus measures.

Elsewhere, Tokyo's Nikkei ended the day 0.2-percent higher, with speculation that Japan's central bank will unveil fresh stimulus following last week's double earthquake boosting sentiment.

However, Mitsubishi Motors crashed more than 15 percent on reports it had conducted faulty emission tests. The news comes as German car titan Volkswagen struggles to recover from its own massive emissions-cheating scandal, which hammered its reputation.

The unease on trading floors seeped through to foreign exchange markets, where the dollar retreated against the haven yen, while emerging market units gave up early gains or turned negative.

"Volatility in Chinese equities will still be very high, causing investors to be more cautious in other developing countries' markets," said Namchai Techaratanawiroj, the head of research at LH Securities Co. in Bangkok.

"We would see some selling pressure on some shares in the region after the current rallies to lock in profit."

Global equities had charged higher on Tuesday as rising oil prices and buoyant German investor confidence brought cheer to markets.

AFP